ACA predicted to have minimal impact
BETHESDA, MD – All healthcare spending in the United States is projected to grow at an annual average rate of 5.8 percent for the period 2010 through 2020, according to a report released in late July by the Centers for Medicare and Medicaid Services.
This annual increase is 1.1 percentage points faster than expected growth in the gross domestic product (GDP). By 2020, healthcare spending is projected to be 19.8 percent of the GDP, increasing from 17.6 percent in 2010.
By 2020, all healthcare spending will reach almost $4.64 trillion, nearly half of which will come from government sources. These projections, made by economists and actuaries in the Office of the Actuary at CMS, include CMS’ first-ever sector analysis of the expansions in health coverage required by the Affordable Care Act.
According to Sean Keehan, lead author of the study, the ACA will have only a minor effect on the overall growth rate in the next decade. “Without including the impact of the ACA, the growth rate would be 5.7 percent. The ACA only adds 0.1 percent to growth,” said Keehan.
Analysts expect a spike in the growth rate in 2014, as private and public health offerings are expanded in accordance with the ACA.
Keenan said an 8.3 percent growth rate is projected in 2014 when the ACA goes into effect, due mainly to people seeking prescription medication and physician services for the first time. This is compared to a projected growth rate of 5.5 percent in 2013.
“In 2014, spending on prescription drugs and physician and clinical services will grow quicker than spending on hospital services, reflecting the needs of newly insured Americans, who are expected to be younger and healthier on average than currently insured Americans,” said Keehan.
By 2020, CMS projects the number of uninsured persons to be reduced by nearly 30 million as a result of the ACA.
Keehan and coauthors also project a rise in the percentage of total health spending in the United States that is paid for with local, state and federal government funds.
Rick Foster, CMS’ chief actuary, said it is projected that 13 million workers will move off of private insurance when the ACA goes into effect. “We’ve assumed or expected that in some circumstances with large employers with a low paid workforce, it might be in the best interest of both workers and the employer to discontinue private insurance and move to Medicaid or the exchanges,” said Foster.
“Health spending financed by governments at all levels in the U.S. will increase over the next decade as a result of expansions of health insurance coverage through Medicaid and subsidized private health insurance under the Affordable Care Act, as well as Medicare, as more baby boomers enter the program,” added Keehan.
Foster said Medicare reimbursement cuts will play a part in slowing growth rates. “There are some provisions in the ACA that do affect the projected growth rate. The adjustments of Medicare payments to most categories of providers clearly slows down the growth rate for Medicare,” said Foster. “However, we have noted that in the long range, it might be difficult to sustain that kind of payment schedule.”
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